WINOOSKI — State officials said Monday that CGI, the lead contractor developing Vermont Health Connect, is being dumped from its development role in favor of a new firm.

CGI will continue to perform hosting services for the state but will no longer be developing the software and technology that drives the state’s online health insurance marketplace.

Lawrence Miller, who is Gov. Peter Shumlin’s chief of health care reform, and Mark Larson, commissioner of the Department of Vermont Health Access, announced the change at a news conference in Winooski.

It was an abrupt reversal for the Shumlin administration, which had been steadfastly standing behind CGI’s efforts to fix the troubled website, even while other states and the federal government dismissed the firm weeks and months ago.

“Over the weekend, we have concluded a transition agreement with CGI to be able to move the work that’s in progress and the work that’s completed and not yet deployed over to the state and (its) new development partner to complete the testing, defect remediation and buildout of Vermont Health Connect,” Miller told reporters Monday.

The administration’s tone had shifted in recent weeks, with even Shumlin, a second-term Democrat, noting that the tens of millions paid out so far for the site has not been worth the cost. But he has pledged to see the project through to a successful completion.

The state will pay CGI an additional $9.7 million for work to be completed through Sept. 20, bringing its total haul — nearly all federal money — to about $67 million for the unfinished site. It was to be paid $83 million for the work.

CGI was on the hook for $5.1 million in penalties for prior missed deadlines. The penalties are reflected in the separation agreement, according to Larson.

“We believe that this agreement respects the value of that $5.1 million,” he said.

Miller said it “seems likely” that the $83 million cost of developing the site will go up as the state negotiates with the new developer. “At this point we do not have an estimate for increased cost,” he said.

Shumlin, who has continually expressed optimism about the project, was not made available to reporters Monday but issued a statement.

“The Vermont Health Connect website and the slow pace of improvements have been the biggest disappointment and frustration of my governorship. It is my hope that today’s changes will be a positive step toward completing this project so Vermonters are delivered the product they were promised,” Shumlin said.

Miller said the decision to part ways was mutual between the state and CGI. He said CGI wanted out and the state was looking to go in a new direction.

“It’s safe to say that when you get to this point in a project with this many challenges, I think it was very difficult for both parties,” he said.

Linda Odorisio, CGI’s vice president of global communications, issued a statement Monday noting the firm has completed most of the work under its contract.

“CGI is proud of the role it played in helping 85 percent of eligible Vermonters enroll in a health plan via Vermont Health Connect. With a majority of our exchange development work complete, we look forward to providing ongoing hosting services in Vermont for one of the country’s most successful health care exchanges,” she said.

Miller said the timing was right for the change.

“We do feel this is an appropriate time to responsibly transition without disruption to Vermonters who are already being served by the exchange,” Miller said. “This way the work they’ve done will get a second set of eyes in testing and review prior to deployment. We’re feeling like that’s a good next step.”

The exchange, required by the federal Affordable Care Act, has been plagued by technological problems since it launched in October. Thousands of users who need to change information, such as their address or marital status, must undergo a cumbersome manual process rather than the faster, automated way the website was expected to offer.

Additionally, small business employees are still not allowed to enroll through the website and must obtain insurance directly from carriers. That function is now expected to be available next year at the earliest.

The state is making progress on a backlog of the so-called change of circumstance requests, Miller said, but that required contracting with Optum, which inked a $5.6 million deal several weeks ago with the state to help make the manual changes. As of last week, about 8,800 requests remain, down from a high of 14,800 a few weeks ago.

According to Miller and Larson, Optum is expected to take over the ongoing technology development of the exchange website that is being stripped from CGI and can provide “a fresh perspective.” Larson said the firm has been “coming in to help assess and finish work in several states.”

The state is negotiating a contract with Optum for the remaining work. The Centers for Medicare and Medicaid Services, the federal entity known as CMS that oversees the exchanges, is involved in the discussions.

“We have continued discussions with Optum to identify the scope,” Miller said. “CMS’ participation … has given us the comfort that they support this transition and will be there for the state.”

Officials said a number of firms were contacted about the remaining work and proposals were submitted by two. State and federal procurement rules are being followed, but a formal request for proposals was not undertaken because it would take too long.

“I’m not going to sign up for what I’ve seen to be a 12- to 18-month RFP, full-blown RFP process, for something that needs to be done sooner,” Miller said. “We did review a number of folks for their skills and capabilities and made the best judgment we could. We are undoubtedly going to get hammered. I don’t care. Our job is to solve this and to solve it with the best resources available in the time that we’ve got available. That necessarily means making some judgments.”

CGI recently completed work on a series of upgrades. The next version of the core software designed and built by CGI, which includes elements that will allow for electronic renewal of health insurance plans, has been sent for testing. Change of circumstance code is also in testing, Miller said.

But significant work still must be done before those functions go live.

“Testing is not checking that it’s done. Testing is the development process of running through every scenario and figuring out what’s broken and fixing it,” Miller said. “We are stepping back and doing a comprehensive evaluation of all work completed to date in the testing environment.”

Officials hope the automated renewal process is available by the open enrollment period later this year, but are creating contingencies.

“We’re going to make sure that a paper process is also available for people,” Miller said. “One of the things we’ve learned is that more ways of getting your information in and letting us know what you want is better than fewer ways.”

CGI’s completion of the work now in testing provided an appropriate time for the firm and state to split, Miller said. It “seemed like the right time to be able to do this without putting people in more chaos,” he said.

Miller deflected questions about whether the change should have been made sooner.

“I don’t think you normally ask when the relieving pitcher comes in whether the first guy ever should have been on the mound in the first place,” he said. “This has been a long project with a lot of challenges, and it’s appropriate for a fresh perspective.”

The focus now is working to ensure that the next upgrade to the site “is bulletproof and solves the issues that are outstanding,” Miller said.